Moravia likely to be spared from Visteon layoffs

By: Erich Handl, 12. 11. 2007, More by this author

U.S.-based automotive part supplier Visteon Corporation, which has three plants in the Czech Republic, has announced extensive international work force reductions.

Last week, Visteon’s office in Detroit, Michigan, U.S., released a statement saying it would cut hundreds of jobs by mid-2008, both in the U.S. and across Europe. The layoffs are a part of a cost limiting plan. “We have informed our employees that as part of our continuing effort to improve the company’s performance, we are taking a number of actions, including the elimination of 500 salaried positions globally,” Kimberley Goode, vice president of corporate communications at Visteon, said in U.S. newspaper Crain’s Detroit Business. The affected employees will learn within half a year whether their positions have been eliminated, she said. “We will reduce positions in management, in particular in areas such as human resources, finance, legal and accounting. We want to reduce our overall cost structure,” she added.

In the Czech Republic, the corporation has some 4,000 employees at three plants—the former Autopal factory in Nový Jičín, North Moravia, and two more plants in Rychvald, North Moravia, and near Uherské Hradiště, South Moravia.

But Czech plants seem to be safe. “Our plants are not being considered for the reductions,” Jana Prudilová, spokeswoman for the Nový Jičín plant, told CBW.

That statement is in line with Visteon’s strategic plan to cut jobs in what it considers “high-cost countries.” The Czech Republic does not rank among these, as it is still considered a country with cheap labor.

As part of this new strategy, Visteon has sold its Chennai, India, drivetrain plant, which employs 800 people. It also announced the closure of branches in Connersville and Bedford, both in the U.S. state of Indiana. In October, Visteon also reached an agreement to sell its plant in Swansea, Wales.

These sales did not stop Visteon’s economic losses. For the third quarter of 2007, the company reported a loss of $109 million (Kč 1.9 billion/€ 73.9 million), on revenue of $2.4 billion. The loss was a year-on-year improvement of $60 million. The company management may need to extend its restructuring program. “We will come out trumps up in the end,” said Michael Johnston, CEO of Visteon, at a recent meeting with analysts. The turning point will come in 2009, Johnston said.

“We are making progress in every aspect of our improvement plan by implementing our restructuring actions as planned and continuing to improve and grow our operations to position Visteon for long-term success,” he said in a company statement.

Visteon Corporation is a multinational automotive supplier that was spun off from Ford Motor Company. It develops components for car air conditioning, interiors, electronics and lights for various carmakers, and is a supplier for the spare parts market. The corporation has its headquarters in Michigan, U.S., and has more than 170 plants in 24 countries around the world. The company employs approximately 43,000 people, and its annual sales revenue in 2006 was $11.4 billion, according to company figures. Its customer base includes the 19 largest vehicle manufacturers in the world.

From Ford to Visteon

Visteon entered the Czech Republic by acquiring the Autopal plant in Nový Jičín in 2000 from Ford. Autopal was a traditional domestic company until 1993. The company had grown from a small tinsmith shop, founded on Oct. 4, 1879, by Josef Rotter. At the beginning of the 20th century, production focused on car plugs, kerosene and acetylene lamps, carriage lamps, and lamps for motor vehicles and train engines. Autopal, a national enterprise, was established in 1949, and manufactured lights and cooling technology for all domestic manufacturers of passenger cars, trucks, coaches, tractors, trams, train engines, railway vehicles, vans and special vehicles until 1992. A significant milestone in the history of the company came on July 13, 1993, when the enterprise was acquired by Ford. Autopal became a part of Visteon in April 2000.

The number of company employees rose to more than 4,000 and annual revenue approached Kč 12 billion. The parent corporation has also built two research and development centers in the Czech Republic, increased the number of customers from three to 22 global carmakers and restructured plants in Hluk, near Uherské Hradiště, and in Rychvald, and built a new plant in Slovakia.

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